Will VARs Have a Place in the 2018 Channel?

There’s no doubt that the traditional channel of yesteryear is disappearing more quickly every day. How many pure-play resellers are still raking in the cash? How many straight-laced MSPs are still banking on non-cloud managed services? The lines blur more every day.

SMB IT research and analyst firm TechAisle estimates that 68 percent of VARs are offering managed services, and both MSPs and VARs are chasing the cloud services cash cow. In 2018, when IoT finally begins to fulfill its channel potential, the traditional channel’s approach of creating and managing services on top of a client-owned infrastructure is (as we say down here in Texas) a dog that just ain’t gonna hunt.

There are just too many emerging technologies that don’t fit into the traditional resale/managed services model, and too many end users are demanding consumer-grade experiences in their businesses. They want flexibility to adopt and discard new tech at their pleasure, a monthly price they can work into their OpEx models, and freedom from the responsibility that comes with actually owning the infrastructure that supports their tech initiatives.

Channel players today have to be able to understand client business goals, processes, and workflows if they want to be able to deliver the kind of outcomes customers have come to expect while fulfilling the potential that emerging trends such as artificial intelligence, robotics, augmented and virtual reality, blockchain and other advanced technologies offer.

So what will 2018 hold for “traditional” VARs? Grant Sainsbury, SVP of Solutions for Dimension Data Americas, says that it will be a case of building upon already established areas of expertise such as business consulting, deep IT skills, and systems integration with more flexible and applicable skillsets that can leverage the benefits of emerging tech to satisfy ever more demanding clients.

“The application of these [technologies] require skills more typically associated with System Integrators than VARs, but that doesn’t mean the VAR market will be unaffected,” said Sainsbury.

The scale needed to affordably support the number of IoT devices that will be connected to the network in 2018 will be beyond the capabilities of most organizations. Traditionally, the ratio of most business models to the managed services needed to support organizations’ infrastructure was manageable enough that many companies could handle it in-house or through the traditional channel. They’d buy their hardware from VARs, then contract with them to provide those support services.

Today, far fewer organizations need to own their own corner of the data center. In fact, the sheer amount of data that IoT drives renders that model financially unfeasible for most. Far better for those businesses to own the data and have someone else own and manage the infrastructure. That’s a window of opportunity for VARs.

Sainsbury also points out that as IoT continues to drive the need for hybrid cloud solutions, the complexity of the support and managed services that encapsulate the myriad of public and private cloud platforms plus their own internal IT infrastructure will be too much to handle without the help of a trusted advisor. And we all know that’s where VARs shine.

But just as VARs began incorporating managed services into their portfolio years ago in order to stay relevant, they’ll need to develop new competencies to thrive in 2018. Software, in particular, will drive the need for more evolved skillsets from traditional service providers, says Sainsbury, such as application architecture and development skills. In order for businesses to keep pace with current technology evolution, they need to understand containers, microservices, programmable infrastructure, and so forth. If VARs want that piece of their customers’ pie, they’ll need to be able to speak to those competencies.

They’ll also need to adjust to the IT procurement model that software requires, says Sainsbury. It’s the old recurring revenue albatross around VARs’ necks.

“Software is an asset with lifecycle management needs, and adoption services are important for end user organizations to derive most value from their investments.”

Will the need for VARs disappear in 2018? No—but VARs will need to evolve in order to keep pace. And in a channel ecosystem where VARs offer managed services, cloud services, system integration, IT consulting, and business advice, does it even make sense to call them VARs anymore?